19/01/2012: One Question, please...

In the spirit of asking our Troika overlords questions around the time of their serial reviews of Ireland's Programme, here's mine:
"Given that since the previous review, Irish economy has posted

1. A full quarter of GDP & GNP contraction
2. Missed targets on fiscal side covered up by vague reforms papers publications and capital spending cuts, plus 'temporary' tax measures
3. Rampant tax increases & state costs rises, covered up by deflation in the private sector economy
4. Stuck sky-high unemployment, with massive contractions in labour force and emigration
5. Another botched 'austerity' budget with hope-for revenue measures substituted for reforms of spending
6. Repayment of billions in bust banks bonds
7. Continued lack of recovery in its banking sector

What part of (1)-(7) above constitutes 'successful completion' of the review?"

Economics 21/11/10: How much funding will we need?

I've run through some figures for the expected amount of bailout drawdown for Ireland. Here are the sums:

• 2011-2014 deficit financing: €17bn in 2011 (accounting for expected increase in interest payments), €16bn in 2012-2014 annually (allowing for €15bn adjustment in 2011-2014 framework to be published by the Government) = €65bn
• Banks capital demand: €37bn in residual capital losses including Nama and incorporating expected mortgages defaults of €12bn
• Bonds redemptions forthcoming (hat tip to Brian Lucey): commercial paper =€ 6.4bn in 2011, redeemable out of IMF loan and thus non-replicative over 2012-2014, bond issues €4.4bn in 2011, €5.6bn in 2012 and €6bn in 2013, to the grand total of €22.4bn
• Banks liquidity supply - immediate draw on IMF funds - €28-35bn

Adding these up: total demand for funds in the amount of €152.4-159.4bn

Government has available ca €20bn (nominal) reserves from NTMA and ca €12bn in liquid funds from NPRF that can be accessed, implying net demand on IMF/ECB funding is €120-127bn.

Assuming the expected haircut on all bondholders in Irish 6 covered institutions implies additional savings of ca €10bn not factored in the above. However over the years 2012-onward I expect Nama to start showing losses. In addition, I suspect that the Exchequer will have to cover losses in the Central Bank of Ireland relating to their lending to the Anglo, which can be in excess of €10bn.

Interest charge on the IMF/ECB loan is likely to be around 5%, providing for a demand for €6bn in annual interest repayments.